Consumers warned over Crossroads product from Asset Income Plan Ltd

With equity release plans often used to finance long-term care, the financial regulator FSA warns consumers:

“If you are considering using your property to generate an income, we advise you to be cautious about products that offer a no cost way of doing this. One such product we are aware of is called Crossroads.

"Promotional material that we have seen claims that the product pays homeowners an annual income of 5% based on 50% of the value of their property for a set period of time – three and ten year periods have been mentioned. It says that to receive this income, the homeowner must allow an insurance company to take a legal charge on their property up to a maximum of 50% of its value.

"You need to be aware that when a firm has a legal charge on your home, it means that they have rights over your property. The product information states that the only risk of you having to sell your home would be if the insurance company became insolvent and that this is reduced because the product is covered by capital risk insurance.

"It is not clear if this is correct and whatever steps may be taken to reduce the likelihood of the firm carrying this out, your home may still be at risk.

"The product information explains that Crossroads is not regulated under our rules. This might mean that its advisers and providers do not need to be authorised by us, although there is not enough information currently to confirm that.

"Contact our Consumer Helpline on 0845 606 1234 if you are concerned about the Crossroads product or any products making similar claims.”